q4 2019 earnings call presentation · 2019 q4 highlights record q4 revenue, up 6.2% • flat...

February 6, 2020

4th Quarter2019 Earnings Conference Call

4th Quarter 2017 Earnings Call 2

Forward-looking statements

During this presentation, we make certain forward-lookingstatements concerning plans and expectations for CarlisleCompanies Incorporated. We caution you that actual eventsor results may differ materially from our plans andexpectations. See our Form 10-Q for fourth quarter 2019 filedwith the Securities and Exchange Committee, these slidesand the remarks in the conference call and webcast, the firstquarter financial results 8-K and release for risks anduncertainties which could cause actual results to differmaterially from current expectations.

Non-GAAP financial measures

Certain ratios related to our Revolving Credit Facility of Earningsbefore Interest, Income Taxes, Depreciation and Amortization(“EBITDA”), Free Cash Flow, Net Debt, Net Debt to EBITDAratio, and Net Debt to Capital Ratio are not measures of liquidityor financial condition under US GAAP. See slide 16 and theappendix to this presentation for a reconciliation of thesemeasures to the most directly comparable GAAP measures.Throughout this presentation each non-GAAP measure isdenoted with an *.


• Organic revenue growth of 5%

• Demonstrated sustained price leadership in support of drivingto 13.6% operating margin

• Realized gross COS savings and benefits in line with ourtargeted 1-2% of annual revenues

• Returned over $1B to shareholders through share repurchasesand dividends

◦ $842M cash repurchases of shares◦ $196M of dividends

• Completed 12 strategic acquisitions; reached agreement on 1additional

Continued Execution of Vision 2025 - Plan to Date


2019 Full Year Highlights• Grew total sales over 7% despite enduring four quarters of global industrial production declines

• Increased pricing in all segments, contributing 1% of year-over-year sales growth

• Operating income grew approximately 29% year-over-year, exhibiting strong leverage on our top line growth, with

margins expanding 220 bps year over year to 13.6%

• Strong operational performance generated $8.21 of diluted earnings per share, up 40% year over year

• Generated free cash flow of $614M, converting at a rate of 130%

• Executed on our commitment to return capital to shareholders, we repurchased over $380M of shares and paid

over $100M in dividends

• Increased our dividend 25% to $2.00 per share annually

• Deployed over $615M on 8 strategic acquisitions during the year


2019 Q4 HighlightsRecord Q4 revenue, up 6.2%

• Flat organic revenue growth◦ 5.1% organic growth at CCM

• 6.4% acquisition growth

• FX was an unfavorable 0.2% impact

Operating income increased 23.3% driven by:

• Strong operating leverage driven by CCM

• Raw material savings, lower restructuringand savings from COS

• Partially offset by wage inflation and lowervolume at CFT and CBF

Financial Summary

(in millions, except per share amounts) Q4 '19 Q4 '18 Δ

Revenues $1,144.3 $1,077.3 +6.2%

Operating income $141.3 $114.6 +23.3%

Income from continuing operations,net of tax $104.0 $89.1 +16.7%

Diluted EPS from continuingoperations $1.81 $1.49 +21.5%

Operating income growth nearly 4xrevenue growth

27th consecutive quarter of year-over-year sales growth


2019 Q4 Revenue Bridge

Q4 '18 Organic Acquisitions FX Q4 '19

0.0%

+6.4%

Organic Revenue by SegmentConstruction Materials +5.1%

Interconnect Technologies -3.1%

Fluid Technologies -16.1%

Brake & Friction -16.6%

$1.14B

(in millions)

$1.08B

-0.2%


2019 Q4 Operating Margin Bridge

Q4 '18 Volume/Price COS Acquisitions Raw Materials/Other Operating

Costs

Restructuring/Rationalization

Costs

Q4 '19

10.6% -0.3% +1.4% -0.6% +0.6% +0.6% 12.3%


2019 Q4 EPS Bridge

Q4 '18 Volume/Price/Mix Material,Freight & Labor

COS ShareRepurchase

Tax Items Other Q4 '19

$1.49 -$0.04

+$0.19 +$0.18

+$0.07 $1.81 -$0.02 -$0.06


Carlisle Construction Materials

• Q4 Notable Commercial Items: ◦ Resilient U.S. commercial re-roofing demand and delivering on The Carlisle

Experience driving sales◦ ~50% growth in year-over-year new product sales◦ Recent acquisition integrations on track

• Operating Income: ◦ Excellent leverage driven by raw material savings, acquisitions, higher volume and

COS savings ◦ Partially offset by wage inflation

Three Months Ended December 31, AcquisitionEffect

Price /VolumeEffect

ExchangeRate Effect(in millions) 2019 2018 Change $ Change %

Revenues $ 753.7 $ 676.3 $ 77.4 11.4% 6.5% 5.1% (0.2)%

Operating income $ 127.6 $ 97.3 $ 30.3 31.1%

Operating margin percentage 16.9% 14.4% +250 bps

Items affecting comparability $ (0.4) $ 0.5


Carlisle Interconnect Technologies

• Q4 Notable Commercial Items: ◦ Strong build rates and increasing content per plane driving growth in Aerospace◦ Sales momentum in Medical markets ◦ Partially offset by 737 Max 8 delays and in-flight entertainment connectivity weakness◦ Announced acquisition of Providien and an agreement to acquire Fileca, strengthening

our CIT Medical Technologies and Aerospace platforms

• Operating Income: ◦ Driven by favorable mix, price realization, and COS benefits◦ Offset by higher restructuring, organic volume decline and raw material / wage inflation


Price /VolumeEffect


Revenues $ 239.2 $ 231.6 $ 7.6 3.3 % 6.4% (3.1)% —%

Operating income $ 29.1 $ 33.3 $ (4.2) (12.6)%

Operating margin percentage 12.2% 14.4% -220 bps

Items affecting comparability $ 6.9 $ 2.2


Carlisle Fluid Technologies

• Q4 Notable Commercial Items: ◦ Acquisition integrations (Hosco, IDS, Shinhang, Ecco) on track◦ Global Automotive and Industrial market weakness remain significant headwinds

• Operating Income: ◦ Decline driven primarily by lower volumes◦ Partially offset by past restructuring and facility rationalization efforts, vertical integration

savings and efficiencies from COS


Price /VolumeEffect


Revenues $ 79.5 $ 82.4 $ (2.9) (3.5)% 12.5% (16.1)% 0.1%

Operating income $ 10.1 $ 12.0 $ (1.9) (15.8)%

Operating margin percentage 12.7% 14.6% -190 bps

Items affecting comparability $ (0.6) $ 0.4


Carlisle Brake & Friction

• Q4 Notable Commercial Items: ◦ Sales decline driven by Off-highway vehicle market demand weakness◦ OEMs continued to reduce inventory and production schedules in Q4

• Operating Income:◦ Driven by lower restructuring costs and efficiencies gained from Tulsa consolidation◦ Organic volume decline deleverage an offset


Price /VolumeEffect


Revenues $ 71.9 $ 87.0 $ (15.1) (17.4)% —% (16.6)% (0.8)%

Operating income $ 0.8 $ (7.1) $ 7.9 111.3 %

Operating margin percentage 1.1% (8.2)% +930 bps

Items affecting comparability $ 0.5 $ 9.1


Focused on Capital Structure Optimization• Cash on hand of $351M as of 12/31/19

• $1B available under revolver

• $103M capital returned to shareholders in

dividends in 2019

• Utilized $382M of cash in 2019 to repurchase

shares◦ 4.9M shares remaining under authorization as of

12/31/19

• Deployed approximately $616M onacquisitions in 2019

• Net debt to cap ratio of 32%*

• Net debt to EBITDA of 1.4x*

• EBITDA to interest of 13.5x*

Debt Maturity Schedule

2020 2022 2024 2027

SeniorNote

$250M 5.125%

SeniorNote

$400M 3.5%

SeniorNote

$600M 3.75%

SeniorNote

$350M 3.75%


Cash Flow

Operating Cash Flow Capital Expenditures

$350

$250

$150

$50

-$50

-$150

(inm

illio

ns)

Q4 '18 Q1 '19 Q2 '19 Q3 '19 Q4 '19

Q4 '18 Q1 '19 Q2 '19 Q3 '19 Q4 '19Operating CashFlow $236.6 $109.8 $87.3 $292.4 $213.6CapitalExpenditures $(24.6) $(23.3) $(17.7) $(15.6) $(32.3)

Free Cash Flow * $212.0 $86.5 $69.6 $276.8 $181.3


2020 Outlook

FY2020 RevenueRestructuring, facility

rationalizationacquisition/divestiturerelated items (in $M)

Growth y/y 1Q20F FY20F

CCM + MSD ~$0-1 ~$0-1

CIT + HSD ~$2-3 ~$4-6

CFT + LSD to MSD ~$0-1 ~$0-1

CBF - MSD ~$2-3 ~$2-3

Corporate ~$0-1 ~$2-4

Total CSL + MSD ~$5-8 ~$10-15

FY 2020

Corporate Expense $100-105M

D&A ~$230M

CapEx $100-120M

FCF Conversion ~120%

Interest Expense, Net ~$65M

Tax Rate ~24%


Reconciliation of GAAP to Non-GAAP MeasuresUnaudited Leverage Ratios under Credit Agreement(in millions except for ratios) LTM 12/31/2019

Income from Continuing Operations $ 474

Income tax expense 122

Interest expense 66

Depreciation and amortization 205

Non-cash stock based compensation expense 26

EBITDA per revolving credit agreement $ 893

Short-term debt including current maturities $ 250

Long-term debt 1,351

Total debt $ 1,601

Less: Cash in excess of $151 336

Debt per revolving credit agreement $ 1,265

Net debt to EBITDA 1.4x

EBITDA to interest 13.5x

1 If the outstanding balance on the revolving credit facility is $0, cash in excess of$15 million is deducted from debt.

$0 outstanding on 12/31/2019

Net Debt to Capital Ratio(in millions except for ratios) Capital

Total debt $ 1,601 Net debt $ 1,250Less: cash $ 351 Total shareholders' equity $ 2,643

Net debt $ 1,250 Total capital (net of cash) $ 3,893

Net debt to capital 32%

q4 2019 earnings call presentation · 2019 q4 highlights record q4 revenue, up 6.2% • flat...

Documents